Targeted Probe and Educate Medicare Audits

Targeted probe and educate (TPE) audits are the latest type of audits facing Medicare providers and suppliers (collectively referred to as “providers”). TPE audits are unique in that providers may be subject to up to three rounds of record reviews. If a provider fails to improve the accuracy of their claims after three rounds, the provider will be referred to CMS for possible further action.

The Centers for Medicare and Medicaid Services (CMS) initially launched TPE as a pilot program in one Medicare Administrative Contractor (MAC) jurisdiction limited to certain types of claims. In October 2017, CMS expanded TPE audits to all MACs for all Medicare providers and all items and services billed to Medicare. TPE audits focus on providers with a history of high claim error rates or unusual billing practices compared to their peers, and items and services that have high national error rates and are a financial risk to Medicare. Common claim errors include: (1) the signature of the certifying physician was not included; (2) documentation does not meet medical necessity; (3) encounter notes did not support all elements of eligibility; and (4) missing or incomplete initial certifications or recertification.

Providers selected for a TPE audit will receive an initial notification letter or “Notice of Review” from the MAC. The Notice of Review will provide the reason that the Medicare provider was selected for a TPE audit and a description of the TPE audit process. Once the TPE process is initiated, the provider may be subject to up to three rounds of record reviews.

Each round consists of a review of between 20 to 40 claims and the supporting medical records. If the MAC determines that the Medicare provider is in compliance with the Medicare rules following the first round, the provider will be removed from the TPE process and the MAC will not review the provider on the selected topic for at least one year absent significant billing changes. If the MAC detects claim errors during the first round, the MAC will issue a letter detailing the errors and will offer the provider a one-on-one education session with the MAC’s provider outreach and education staff. While the one-on-one education session is offered after the MAC’s review, providers can communicate with the MAC throughout the review process.

Following the one-on-one education session, the provider will be given at least 45 days to improve their billing and documentation practices. After the expiration of the 45-day period, the MAC will initiate the second round by reviewing another 20 to 40 claims and supporting documentation. The MAC will issue a second results letter identifying any claim errors during the second round. If the MAC determines the provider is in compliance with Medicare rules during this round, it will be removed from the TPE process and not subject to review for at least one year absent significant billing changes. If the MAC detects claim errors, it will again offer the provider an individualized education session.

Medicare providers who continue to have a certain error rate will be subject to a third round. CMS has indicated that the error percentage will vary based on the service or item under review, but an important factor in determining whether a provider moves on to additional rounds is based upon improvement from round to round. If a provider fails to adequately improve its claim accuracy after three rounds, the MAC will refer the provider to CMS for additional action, including but not limited to, prepayment review, extrapolation of overpayment, referral to a Recovery Audit Contractor, or other disciplinary action.

Claims denied through TPE can be appealed through the Medicare appeals process. The five levels of the Medicare appeals process are as follows: (1) Redetermination; (2) Reconsideration; (3) Administrative Law Judge review; (4) Medicare Appeals Council; and (5) Federal District Court. A provider may pursue an appeal of an overpayment decision through these five levels of appeal.

Given the potential consequences of a TPE audit, it is critical that Medicare providers are proactive about ensuring compliance with Medicare billing and documentation requirements to reduce the risk of being selected for a TPE audit. Providers selected for a TPE audit should timely submit to the MAC the requested records and communicate with the MAC throughout the TPE process to address and resolve any claim errors.